CG Power Irregularities: Gautam Thapar joins probe, rejects allegations of unauthorised deals

Thapar was ousted from the chairmanship of the troubled CG Power and Industrial Solutions last week after alleged irregularities and unauthorised transactions surfaced.

MUMBAI: Businessman-Gautam Thapar joined the probe initiated by the ministry of corporate affairs officials investigating alleged financial irregularities in CG Power and Industrial Solutions and is believed to have dismissed the accusations made by the company’s board regarding unauthorised transactions and raised doubts over the credibility of the report submitted by an independent law firm, according to sources in the know of things.

Thapar was ousted from the chairmanship of the troubled CGPower and Industrial Solutions last week after alleged irregularities and unauthorised transactions surfaced. He presented himself before the MCA officials on Tuesday, while former chief financial officer of the company VR Venkatesh, who was sacked for his role in the said transactions, was summoned by the MCA team on Wednesday.

“The MCA’s scrutiny of the Vaish Associates report will expose its fragilities and incompleteness. The report is heavily disclaimed by its authors who have put in disclaimers for over two pages. If full information was made available, the preliminary conclusions drawn would be different,” a source close to Thapar told ET on the condition of anonymity.

Queries sent to CG Power remained unanswered till press-time Wednesday.

CG Power had formed an operations committee to work on preserving value after creditors of promoter company, Avantha Holding, started invocation of pledge of CG shares. This committee came across financial transactions that had been made without proper authority, and for further investigation, legal firm Vaish Associate was hired. The investigation revealed that the group’s liabilities and advances to certain entities and networth were understated.

MCA has also summoned other crucial management personnel and auditor KK Mankeshwar & Co for the investigation. Sudhir Mathur, who was elevated as executive director from a non-executive independent director, has sought more time from MCA.

“He had an initial meeting with the MCA when their officials came to CG office last week, and shared whatever he could with them at that time. He has informed them that he is travelling for some personal work and will meet them upon return,” a source in the know told ET.

MCA sources said that the CG Power executives are being questioned for allegations of money paid to employees, related party transactions, the report by Vaish Associates, and suspected fund diversions. They are also keen to know the reasons why the then auditors have resigned abruptly in April. The regional director is likely to submit his report by the month end.

“If the inspection report finds major irregularities, then there is a possibility of handing over the probe to MCA’s Serious Fraud Investigation Office, or SFIO, the investigation arm of MCA, to look into suspicious transactions and failure of the company to comply with the provisions of the Companies Act,” said an official requesting anonymity.

Sources close to Thapar said he has sought review and scrutiny of the report submitted by Vaish Associates, and the impact of the report on the company’s share prices that have plummeted. Thapar had earlier said in a statement that there was no fraud or misconduct by promoters and that he was kept out of the investigations.

On Friday last, CG Power reported its financial results for the quarter and year ended March but the auditors added a disclaimer that they were unable to determine the consequential impact of certain transactions on the results due to the discovery of many unauthorised transactions. They said that a forensic investigation is being commissioned to ascertain completeness and establish the wrongdoing.




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